Enterprise-based
unionism is a significant feature of Japanese industrial relations. In this
system, trade unions are established within an individual enterprise. They
bargain collectively with a single employer. Collective agreements are
concluded at the enterprise level. These are the main characteristics of
enterprise-based unionism.

Enterprise-based
unions within the same sector often join a sectoral federation of unions and
the sectoral federations are affiliated with national confederations. However, sector-level
collective bargaining is very rare in contrast with European societies.

An enterprise-based union consists of workers who work in the same
company irrespective of their jobs. This means that both blue-collar and
white-collar workers are organized in the same union. Enterprise-based unions
normally limit their membership to regular workers though there are no legal
obstacles which prevent enterprise-based unions from organizing part-time,
fixed-term or temporary workers.

This
is due to the fact that the interests of regular workers are different from that
of non-regular workers, and they sometimes even conflict. Regular workers are
employed under indefinite term contracts and are paid with a monthly salary. In
contrast, non-regular workers are usually employed under fixed-term contracts
and are paid at an hourly rate. It is understood that regular workers
implicitly agree to comply with overtime orders or transfer orders in accordance
with business necessity, while non-regular workers usually do not owe such
obligations.

It
is the established practice to terminate contracts of non-regular workers
before dismissing regular workers. Therefore, the employment security and
better working conditions of regular workers are often sustained by the
unstable and contingent employment of non-regular workers. This difference
between regular and non-regular workers prevents enterprise-based unions from
actively organizing non-regular workers within the same company.

2 Decentralized
Collective Bargaining and Shunto

The most significant feature of collective bargaining in Japan is its
decentralization. Reflecting the organizational structure of trade unions in Japan, most
collective bargaining takes place at the company level. Sector-level or
national-level bargaining is very rare. As a result of decentralized
bargaining, most collective agreements are concluded at the company level.
Since their application is confined to the individual company, collective
agreements in Japan do not create universal norms which are applied to particular
sectors or occupations.

This
decentralized bargaining system has enabled enterprise-based unions and
employers to adapt changing socio-economic circumstances swiftly and flexibly.
On the other hand, it has several defects, such as the weak bargaining power
and the lack of the universal impact across the sector or nation.

To
compensate for the weakness in bargaining power and lack of sector or
nation-wide impact, trade union leaders devised a unique wage determination
system called gShuntoh (spring wage offensive) in 1955. Under the Shunto
system, every spring, sectoral federations of enterprise-based unions and the
national confederation set the goal for wage increases and coordinate the time
schedule of company-level negotiations and strikes across companies and sectors.
According as the schedule, strong enterprise-based unions in a prosperous sector,
which are chosen as pattern setters, start negotiations first and set the
market price for that year. Other enterprise-based unions then follow suit. The
market prices established in Shunto also affect the public sector where strikes
are prohibited. In this way, the Shunto strategy has compensated for the
limitations of enterprise-based unionism in terms of bargaining power and
establishing social standards across companies and sectors.

3
Information and Consultation via Enterprise-based Unions

There
is no general legislation concerning employerfs obligation to inform and
consult employeesf representatives in Japan. However, Japanese companies and
enterprise-based unions have developed joint consultation committees (Japanese
works councils). Majority of such committees are established in the form of
collective agreement between a single company and an enterprise-based union.

In
European countries where cross-enterprise unions are prevalent, trade unions
and employee representatives are distinctly separate. However, the situation is
different in Japan. The members of an enterprise-based union are the employees
of the company, and the trade union is a single, exclusive organization
composed only of those employees. Therefore, under the joint consultation
system, the representatives of labour and management are entirely the same as
the parties to the collective bargaining. Moreover, both labour and management
conduct discussions and negotiations through these systems in the broad sense.
Therefore, collective bargaining and joint consultation are, in fact, difficult
to be distinguished in terms of organization and its function.

As
union density has fallen from 55.8% in 1949 to 35.4% in 1970, to 25.2% in 1990,
and to 18.1% in 2007, the number of workers who are not organized by trade
unions has increased. This is particularly the case for small-and-medium-sized
enterprises. In companies with 1000 employees or more, union density is 47.5%.
But it is 14.3% in companies with 100-999 employees, and it is just 1.1% in
companies with less than 100 employees (2007). This means that many
medium-sized enterprise workers and almost all small-sized enterprise workers
are virtually excluded from information and consultation procedure which larger
enterprise workers can enjoy. Therefore, some labour law academics have advocated
the introduction of statutory employeesf representation scheme.

4
Majority Representative and Labour-Management Committee

Majority representative system is another legal system concerning
collective industrial relations which was established by Labor Standards Law
(enacted in 1947). The Law stipulates that an employer shall ask the opinion of
majority union or ga person representing the majority of workers where no such
trade union existsh when he draws up or changes work rules. An employer is also
obliged to obtain the agreement of majority union or gmajority representativeh when
he orders overtime work. The Law has no explicit provision of who should
represent the majority of workers from non-unionized workplace. The Law does
not stipulate details such as how to elect majority representative or his
competences and responsibilities. The legislators may have thought it just a
substitute until trade unions are organized at every workplace. Majority union
should be principle, and majority representative should be exception. However,
under the long-lasting decline of union density, there are very often gmajority
representativesh appointed by the employer without consulting any workers, who
tend to be just rubber stamps.

In 2005, Study
group on labour contract legislation set up by Ministry of Health, Labour and
Welfare issued a report which advocated the general legislation on
labour-management committee. In the report, the committee is proposed to be utilized
as a mechanism for determination and modification of working conditions. If the
committee or majority union agrees on the disadvantageous change of working
conditions or collective dismissals, they may be regarded as greasonableh and gjustifiedh.
The topic has been discussed in the tripartite Labour Policy Council in 2006.
However, because of the oppositions from trade union side, this idea could not
be realized. They insisted that such a huge competence should not be given to
non-union committee, which is apt to become rubber-stamp of the employer.

5
Towards a New Employeesf Representation System?

Because
the coverage and the function of both enterprise-based union and gemployeesf
representativeh overlap in Japan, it is particularly difficult to design
employeesf representation system. If such an organ can be set up at an already
unionized workplace, it may affect the activities and membership of the union
badly. Even in a non-unionized workplace, the existence of non-union employeesf
representative may hinder the motivation of workers to establish a new trade union.
However, the decline of union density and de facto exclusion of huge number of
workers from proper information and consultation procedure make it unavoidable
to review the present industrial relations system.

Indeed, Japan
Trade Union Confederation (RENGO) already prepared its own proposal on
employeesf representation system. In its proposal, JTUC-RENGO criticizes that
current majority representative lacks independence from employer and democratic
legitimacy and advocates the establishment of gemployeesf representative
committee,h which consists of only employeesf representatives who are formally
elected by all employees. The most conspicuous characteristic of the proposal
is that the committee shall be set up at only workplace without majority union.
This means majority unions should function as employeesf representative.
Moreover, the committee should be dissolved when a majority union is established.
This proposal intends to strike a balance between the functional retention of
current enterprise-based unions and the need of establishing new employeesf
representation system.

6
Regulatory Reform and Industrial Relations

From
1990s, Japanese labour market has experienced successive deregulation or gregulatory
reform.h Council for Regulatory Reform which was established within the
powerful Cabinet Office has advocated deregulations in working time
regulations, upper-limit of fixed-term contract or limitation of the use of
temporary agency work. These policies have been realized through the
time-consuming discussions in the tripartite Labour Policy Council within the
Ministry of Health, Labour and Welfare. From 2005 on, however, the social atmosphere
has been completely reversed from enthusiasm for deregulation to re-regulation
in the fear of gpolarized society.h For example, the intention of introducing
so-called gwhite-collar exemptionh or opt-out of particular workers from
working time regulation failed because of harsh criticism in 2007. Regional
minimum wages were vastly raised with the intervention of the Cabinet in 2007
and in 2008. Moreover, the discussions on temporary agency work in the
tripartite council changed the course from further deregulation to limitation
and regulation. The proposal for the revision of TAW Law (providing prohibition
of short-term TAW, promotion of indefinite contract, fair treatment of TAW
workers etc.) is now in the Diet (Parliament).

Faced
with this sudden gbacklash,h in 2007, Labour Taskforce of Council for
Regulatory Reform published defiant policy paper entitled gTowards a labour
market of de-polarization and vitality.h In this paper, almost all regulations
in the labour market are harshly criticized. gRemaining myth that strengthening
the rights of workers leads to the protection of workers is wrong. Raising
minimum wages leads to the unemployment of workers with under-productivity.
Strengthening the rights of female workers leads to abstention of hiring of
female workers. Regulation of dismissals of regular workers leads to the shift
to non-regular workers. Direct employment of long-served TAW workers by user
companies leads to cancellation of TAW contracts. Upper limit of working hours
leads to circumvention of the law.h These assertions were included in the
official report of the Council. Ministry of Health, Labour and Welfare immediately
rebutted these assertions.

Moreover,
the Council for Regulatory Reform also radically criticized the tripartite
policy-making process in the labour issues. It insisted that: gthe opinions of
the trade unions which mainly consist of regular workers do not represent the
interest of non-regular workers. The current policy-making process in which representatives
of employers and workers coordinate their interests should be abolished. Instead,
policy-making process should be entrusted to a efairf policy-making organ,
which only hears the opinions of stakeholders.h Of course, this assertion completely
denies the tripartite principle in the labour issues which is enshrined in the
ILO Constitution.

However,
even if the assertion is biased, it has a point in revealing the weakness of
the foundation of trade unions representing all workers. If most non-regular
workers are not organized, how can trade unions which mainly consist of regular
workers represent non-regular workersf interest which frequently contradicts
that of regular workers? This is a challenge for Japanfs trade union movement.